NOTE (8) – Stock-based Compensation

The Long-Term Incentive Plan, which was adopted by the Company and approved by the stockholders in 2018 (the “LTIP”), permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards. The plan is in effect for ten years. The maximum number of shares that can be awarded under the plan is 1,293,109 shares of common stock as of December 31, 2018. As of March 31, 2021, 490,007 shares had been awarded and 803,102 shares are available under the 2018 LTIP.

In February 2021 and 2020, the Company awarded 20,736 and 30,930 shares of common stock, respectively, to its directors under the 2018 LTIP, which are fully vested. The Company recorded $45 thousand of compensation expense for each quarter ended March 31, 2021 and March 31, 2020, based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the date of the award.

In February 2019, the Company awarded 428,797 shares of restricted stock to its officers and employees under the 2018 LTIP, of which 12,846 shares were forfeited. Each restricted stock award is valued based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the date of the award. These awarded shares of restricted stock are fully vested over a two-year period from their respective dates of grants. Stock based compensation expense is recognized on a straight-line basis over the vesting period. In February 2021, these awards fully vested, and the Company recorded $44 thousand of the related scheduled stock based compensation expense.

In February 2020, the Company awarded 140,218 shares of restricted stock to its officers and employees under the 2018 LTIP. Each restricted stock award is valued based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the date of the award. These awarded shares of restricted stock fully vest over a two-year period from their respective dates of grant. Stock based compensation expense is recognized on a straight-line basis over the vesting period. As of March 31, 2021, these awards became fully vested as a result of the CFBanc Merger. During the quarter ended March 31, 2021, the Company recorded $119 thousand of stock based compensation expense related to these awards, of which $94 thousand related to early recognition of compensation cost as a result of the vesting of restricted stock awards in connection with the CFBanc Merger.

At March 31, 2021, no restricted stock awards were outstanding, and during the first quarter ended March 31, 2021, the Company did not grant any restricted stock awards to its officers and employees.

No stock options were granted during the three months ended March 31, 2021 and 2020.

The following table summarizes stock option activity during the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
	Number Outstanding		Weighted Average Exercise Price		Number Outstanding			Weighted Average Exercise Price
Outstanding at beginning of period		450,000	$	1.62		455,000		$	1.67
Granted during period		-		-		-			-
Exercised during period		-		-		-			-
Forfeited or expired during period		-		-		(5,000	)		6.00
Outstanding at end of period		450,000	$	1.62		450,000		$	1.62
Exercisable at end of period		450,000	$	1.62		360,000		$	1.62

The Company recorded $6 thousand and $9 thousand of stock-based compensation expense related to stock options during the three months ended March 31, 2021 and 2020. In February 2021, these options became fully vested and all compensation cost was recognized.

Options outstanding and exercisable at March 31, 2021 were as follows:

	Outstanding							Exercisable
Grant Date	Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Aggregate Intrinsic Value		Number Outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value

February 24, 2016		450,000	4.98 years	$	1.62				450,000	$	1.62
		450,000	4.98 years	$	1.62	$	157,500		450,000	$	1.62	$	157,500